Lynn Strongin Dodds looks at the final push to EMIR 3 implementation and the hurdles that need to be overcome before the 24 June deadline.
The clock is ticking very loudly as the six-month window to implement the European Union’s latest clearing mandate- EMIR 3.0 – is closing imminently. While there are a few laggards, the general consensus is that the main market participants will cross the 24 June finishing line.
These are the results of the whitepaper, EMIR 3.0: Intentions and Preparations Ahead of Implementation, produced by Acuiti in partnership with Sernova Financial.
EMIR 3.0 represents a significant policy shift aimed at consolidating euro-denominated clearing within the EU, countering post-Brexit reliance on UK-based central counterparties (CCPs). The regulation marks a new era in the European Commission’s long-term capital markets strategy and is seen as a catalyst for long-term structural change in clearing, monitoring, and reporting trades across Europe. Beyond the immediate compliance, the rules are expected to influence strategic long-term decisions around self-clearing, technology investments and risk management frameworks.
Surveying its network of relevant hedge funds, asset managers, regional sell-side and proprietary trading firms during March and April 2025, Acuiti found that at the big picture, 71% of firms in scope for EMIR 3.0 expect to ‘definitely’ be ready for the June deadline. This compared to 9% who will unlikely or certainly not be prepared. It also discovered over a third still had to select the CCP that they would be onboarding with.
Unsurprisingly, there were significant variations between the different cohorts surveyed. The sell-side and asset management groups were the furthest ahead in their arrangements while hedge funds and proprietary trading firms were lagging behind. The last group also lacked awareness of EMIR 3.0 with a significant percentage of firms unsure as to whether they were in range.
This disparity reflects differing exposure to the products covered under the Active Account Requirement (AAR), which is considered one of the most significant components of the legislation. It requires market participants to clear a representative number of trades at an EU CCP in each subcategory of relevant instruments. This includes Euro Interest Rate Swap (IRS), overnight indexed swap (OIS), Euribor, Euro short term rate (€STR STIR) and Forward Rate Agreements (FRAs).
The rules not only set specific thresholds but oblige firms to separate reference periods for each product. This determines the frequency at which the minimum number of trades must be cleared. Based on size, those with under €100bn in clearing volume that are active across all sub-categories in Euro IRS will have to clear five trades from each of that products’ five subcategories.
This helps explain why larger firms are expected to meet higher clearing volumes on a monthly basis, while their smaller counterparts are assessed on a semi-annual basis. Only 12% of those polled had fully implemented these systems for tracking compliance with the AAR.
The report also assessed the popularity of the different CCPs. In the report, Eurex emerged as the winner, with 64% of respondents planning to use it to meet their AAR obligations. By contrast, US-based Nasdaq only garnered a 16% response with Poland’s Krajowy Depozyt Papierów Wartościowych (KDPW), on 5% and Spain’s BME at 2%.
Despite the operational push, most firms do not intend to shift more than the minimum required volume to EU CCPs. Only 5% said they were “quite likely” to go beyond the threshold mainly due to the cost, margin offsets and prime broker advice.
While the AAR seemingly grabs all the headlines, firms must also grapple with a variety of other hurdles including expanded reporting obligations, revised clearing thresholds and enhanced margin transparency requirements. While many of these requirements place the primary burden on clearinghouses and large intermediaries, firms across the ecosystem will also need to review and upgrade the nuts and bolts of their infrastructure.
The size and activities of the firms will determine the work needed but overall, the study believes organisations will need to build workflows and processes for ongoing monitoring. Some of the reporting obligations though, are likely to be integrable with existing infrastructure for reporting.
The process will be relatively simple for those at the smaller end only planning on clearing the minimum number of trades required or moving all their trades over to an EU CCP. This will not be the case for the larger players where automation will be part of the process for firms allocating on behalf of clients or those with more complex trading operations.
Moreover, given the depth and breadth of the regulation, the direct clearing economics are increasingly coming under the spotlight with many undertaking a broader reassessment of their arrangements. The report noted that the case for self clearing becomes more compelling for those that have to maintain positions across multiple CCPs, this is especially the case for regional banks or larger hedge funds seeking to optimise clearing costs and risk management.
